Lemon Tree Hotels (LEMONTRE IN) – Q4FY26 Result Update – Restructuring timeline key to re-rating – BUY
Published on 01 Jun 2026
Despite geo-political tensions in ME, rising technology spends, ongoing renovation exercise and loss of ITC amid change in GST rates, LEMONTRE IN’s operational performance was noteworthy with EBITDA margin of 51.7% (PLe 50.2%). Nonetheless, as opex on renovation, technology investments and hit from GST is likely to be at 4.8%/3.7% of revenue, we expect EBITDA margin of 48.6%/49.5% in FY27E/FY28E respectively. Further, with no big-ticket inventory addition in near term (Aurika, NCR to begin operations in FY30E), we expect 8% revenue CAGR over FY26-FY28E led by inflation indexing and renovation led repricing in same-store RevPAR. Given modest growth prospects and evident margin headwinds, we cut our target EV/EBITDA multiple for the fee income business to 22x (earlier 25x) and Fleur to 20x (earlier 22x) to arrive at SoTP based TP of INR138. Demerger of Fleur with fund infusion of INR9.6bn by Warburg Pincus can change the growth trajectory (pipeline of 2,500+ rooms under active discussion) materially and drive re-rating. Retain BUY.
